Weak Dollar Helping Copper
Copper prices continue to push higher ahead of the weekend, helped by a weaker US Dollar and continued supply concerns related to mine disruptions in Indonesia and South America. The greenback has turned sharply lower this week as a result of the US government shutdown, fuelling an uptick in dovish Fed expectations. With no sign yet of how long the shutdown is likely to last, the damage to the US economy continues to grow. While this situation persists, USD looks vulnerable to continued downside which should help keep copper prices supported. Yesterday’s weaker-than-forecast jobs data, and the NFP being postponed tomorrow, mean that bearish sentiment in USD looks unlikely to resolve near-term.
Supply Disruptions
Alongside a weaker Dollar, copper prices are also being bolstered here by supply concerns linked to mine disruptions in key production regions. Latest data shows that Chilean copper production is down just under 10% YoY s a result of mine closures and disruptions linked to weather-related accidents and maintenance needs. Additionally, the closure of the Grasberg site in Indonesia, which accounts for around 3% of global output, is also fuelling supply concerns. While these issues persist, copper price look poised to continue to gain near-term.
Technical Views
Copper
The rally in copper has seen the market breaking out above the 4.8010 level. With momentum studies bullish, focus is on a continuation higher here with 5.1985 the next target for bulls. The bullish outlook remains in place while price holds atop the 4.8010 level. Below there, 4.5800 will be the next support to watch.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.